The paper investigates the impact of import competition on rent-sharing between firms and employees. First, by applying recent advances in the estimation of pricecosts margins to a large panel of French manufacturing firms for the period 1993–2007, we are able to classify each firm into labor- and product-market regimes based on the presence/absence of market power. Second, we concentrate on firms that operate in an ecient bargaining framework to study the e↵ect of import penetration on workers’ bargaining power. We find that French imports from other OECD countries have a negative e↵ect on bargaining power, whereas the impact of imports from low wage countries is more muted. By providing firm-level evidence on the relationship between international trade and rent sharing, the paper sheds new light on the e↵ect of trade liberalization on the labor market.

Keywords: firm heterogeneity; import competition; mark-up; wage bargaining;

JEL Classification: F14; F16; J50